Pembina Pipeline to buy Provident Energy

Pembina Pipeline Corp. agreed to buy Provident Energy Ltd. for $3.2 billion (Can.) to acquire natural gas liquids assets and create one of Canada’s largest publicly traded pipeline companies in terms of market capitalization. Both companies are based in Calgary.

Terms call for Provident shareholders to receive 0.425 of a Pembina share for each Provident share held. The resulting company will operate as Pembina, which currently operates a crude oil pipeline and natural gas gathering system in western Canada.

The combined company will have a market capitalization of $7.9 billion, Pembina said in a Jan. 16 news release. In comparison, TransCanada Corp. has a market capitalization of $29.2 billion while Enbridge Inc. has a market capitalization of $26.6 billion.

Subject to regulatory approvals, closing is expected after shareholder meetings for both Pembina and Provident. Those meetings are to be scheduled during March. Both companies’ boards are expected to recommend shareholders vote in favor of the transaction.

Bob Michaleski, Pembina president and chief executive officer, said Provident’s NGL extraction, fractionation, and storage assets will accelerate Pembina’s growth plans in those areas. He will retain his title after the deal closes.

“Our expanded footprint will provide greater access to natural gas liquids markets across North America, and will allow us to offer customers a significantly expanded spectrum of energy services," Michaleski said.

Doug Haughey, Provident president and chief executive officer, said the transaction “leverages off Provident's strong growth as a pure-play midstream business.”